Ireland, reeling from a €50bn (£43bn) banking bailout, received another blow today when its manufacturing sector shrank for the first time in seven months.

This underpins the view that the economy's expansion in the first three months of the year was short-lived.

The NCB Purchasing Managers' Index, which measures Irish manufacturing activity, fell to 48.4 from 51.1 in August, dipping below the 50 mark that divides growth from contraction for the first time since February.

"Irish GDP, after expanding in the first quarter on the back of impressive manufacturing output, contracted once again in the second quarter," said Brian Devine, economist at NCB Stockbrokers. "The manufacturing sector has slowed even further in the third quarter," he added.

The survey also showed a deterioration in exports, usually touted by officials as the main route to economic revival.

The sub-index measuring new export orders fell to 49.5 from 54.5 in the previous month, the first fall since October 2009.

Overall, new orders declined for the first time in seven months and production growth slowed, while employment shrank faster than previously.

Eurozone countries created the European Financial Stability Facility in May at the height of the Greek debt crisis to help out members that get into fiscal trouble and cannot finance their budget shortfalls through the bond market.

It was granted authority to raise up to €440bn by issuing bonds guaranteed by eurozone member countries with solid credit ratings.